Investments Trade Log

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Crusader
Posts: 121
Joined: Wed Aug 19, 2020 11:16 pm
Location: Toronto, Canada

Re: Investments Trade Log

Post by Crusader »

I didn't read the rest of the thread, so I appologize if this was discussed before or elsewhere. But, I am quite pessimistic in terms of the COVID situation. I think it will be many months before things go back to normal, and until then, the governments are spending money on the measures, assistance, medicare etc. Many people lost their jobs.

What does this mean for investing? How should we adjust? (I mostly invest in the index, 75% and fixed income/bonds, 25%). My thinking is that even if we have inflation, by owning stocks (i.e. parts of companies), you still own something concrete, so the dollar value will reflect inflation. As for the economy not doing well, well, there isn't much we can do about that, so my strategy has been to change nothing.

biaggio
Posts: 21
Joined: Sun Apr 23, 2017 5:31 am

Re: Investments Trade Log

Post by biaggio »

I don't know. Here's one simplistic line of reasoning. Developed markets received awesome injections of new money, much bigger than during the GFC---notice the spike in supplies (https://fred.stlouisfed.org/series/M1 or more broadly https://fred.stlouisfed.org/series/MZM). The velocity of money, the number of times a dollar is spent to produce nominal GDP, has been going down (https://fred.stlouisfed.org/series/M1V or https://fred.stlouisfed.org/series/MZMV). This means (or rather could mean) that it's being hoarded by wealthy companies and private individuals.

A large chunk could end up with big well-performing companies that are included in the main stock indexes so sticking to indexing looks like a sound idea to me.

Crusader
Posts: 121
Joined: Wed Aug 19, 2020 11:16 pm
Location: Toronto, Canada

Re: Investments Trade Log

Post by Crusader »

Interesting, thanks for that, biaggio! Maybe what's happening is that the injections of money are going to the poor communities that have to spend it all and so the money ends up being in the hands of the big corporations. Knowing all this, maybe the smart thing to do is to invest in the industry that deals with the essentials: food, utilities, medicine.

EDIT: a very basic, quick investigation made me think that my hypothesis is wrong. Maybe now people are spending less money on luxury goods from food and trying to save on utilities and so the profits are lower as well. These market trends seem very hard to predict. I am sticking to the index.

Der Leiermann
Posts: 13
Joined: Mon May 11, 2020 5:32 am

Re: Investments Trade Log

Post by Der Leiermann »

Crusader wrote:
Tue Jan 12, 2021 1:47 pm
My thinking is that even if we have inflation, by owning stocks (i.e. parts of companies), you still own something concrete, so the dollar value will reflect inflation.
This may seem logical (it was to me) but has it been the case in the past? Ben Graham, the grandfather of investment gurus has done some research on that hypothesis. In the time period from 1915-1970 there was sometimes high inflation and negative stock growth or negative inflation and high stock growth (and everything in between). His conclusio is that there is no strong relationship between stock market returns and inflation. Source: The intelligent Investor, chapter 2

Crusader
Posts: 121
Joined: Wed Aug 19, 2020 11:16 pm
Location: Toronto, Canada

Re: Investments Trade Log

Post by Crusader »

Der Leiermann wrote:
Wed Jan 13, 2021 3:39 am
Did they control for how well the economy was doing? If the economy is sh*t, it might offset the increase in dollar value of a given asset due to inflation, because that asset is now no longer able to produce profits.

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Lemur
Posts: 884
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

Maxed my tIRA this morning from some premiums I've been collecting since December (PLTR cash-secured puts), and some additional after-tax savings. Put all this money into increased international allocation (VXUS). With all the excitement and trading bubbles lately...I figured it was time to allocate towards the boring.

I still have open CSPs on PLTR that expire in February and if I'm lucky that might even close today for 50% profit after the 10% underlying stock pop.

My large allocation towards AMD is dragging me down lately. Intel is stepping up the plate lately with some changes. I'm confident AMD earnings will bring it back up. AMD is long-term anyway so I probably shouldn't be too concerned with short-term price drops, but I do have deep ITM Leaps here.

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